Curtis Financial Planning

S3 E1 Transcript: What Every Woman Needs To Know About Long-Term Care Insurance

Welcome to the Financial Finesse Podcast, where we’ll be discussing tips on how to handle your money and life with skill and style. Your host, Cathy Curtis, CFP® has been helping make finance accessible and intriguing for women for almost 20 years. You’ll get savvy, actionable ideas, listening to her conversations with some of the coolest and smartest women on the planet. And now, here’s your host, Cathy Curtis.

00:53 Cathy Curtis:

Hi, I’m Cathy Curtis, host of the Financial Finesse Podcast, and also founder of Curtis Financial Planning, a financial advisory firm that partners with women to manage their financial lives.

Today, I’m looking forward to talking with one of my favorite people in the industry, Liz Eshleman, who is an independent long-term care specialist. Not only does she know her stuff when it comes to long-term care insurance, she’s also a delightful upbeat personality.

Maybe that comes partially from her background as a singer and performer. She spent 16 years at Mills College in Oakland, teaching music theory and and teaching voice education. And she even started an advanced vocal ensemble program at Mills. She’s been an educator for 30 years, which really helps her in educating people about long-term care, which can be very complicated.

So how Liz and I work together, I’m a financial planner. And I work with my clients to build comprehensive financial plans. A very, very important aspect of financial planning is the fact that you’re going to live a long time, and that you need to save your money for your retirement years. And what happens when we get older, is we need more medical care. And a large percentage of us are going to need long-term care of some kind. In fact, about 70% of people will need some kind of long-term care.

And that is what I call a risk in a plan. Do you have enough money saved to handle that long-term care issue and cost. So that’s why I partner with long-term care specialists like Liz when I see a need with my clients that they might need to have that extra long-term care insurance policy to help them out. So Liz and I are partners in that. And I trust her completely to take care of my clients and educate them about only what they need. She never sells more than someone needs. And she is a really great consultant.

So then on long-term care, I want to add one more thing. It’s sort of a women’s issue, because as we all know, women live longer than men. 64% of Americans with Alzheimer’s are women. And the statistics of the number of women in nursing homes are also huge. 68% of people in long stay and nursing facilities are women. And in addition, women end up being the caretakers if their husband needs long-term care. So this ends up being a really big issue for women.

So I’d like to get into the weeds with you, we’re gonna try and keep it as easy to understand as possible, because long-term care can be complicated. And one issue that always comes up is the issue of eligibility for the insurance. And that’s why I want to start with that. There’s nothing more disappointing than somebody decides that they want to buy a long-term care policy, they’re willing to learn about it and make the commitment to buy. They talk to an agent and they find out they aren’t eligible for whatever reason, like medications they take for a condition they have had.

And Liz is really expert in how these insurance companies view people and their medical conditions. And the first step is she has a conversation with you to screen and figure out whether you will be eligible and if not, how she can counsel and coach you to become eligible. So I’m going to start talking and I’m going to let Liz take over on this eligibility issue.

04:57 Liz Eshleman:

Great. Thanks, Cathy. And thanks very much for having me today, it’s a pleasure always to work with you, and happy to help your clients in any way I can. This issue of eligibility is thorny, because people don’t realize that, in fact, some of my most healthy clients overall, for instance, my athletes, clients who are runners or skiers, even swimmers, if they have an issue, for instance, a chronic tennis elbow or a bad shoulder from swimming, or, you know, any kind of what’s construed as a mobility issue, they’re not insurable. So I’ve got really healthy clients, who for a time, if it’s not chronic and ongoing, can’t get coverage.

Now, what do I mean by chronic and ongoing? Well, just what it sounds like, if it’s a short-term issue, they’re in physical therapy for three months or six months, I’ll be able to help them after they’re done with their physical therapy. But there’s a waiting period. And if the problem doesn’t go away, which is often the case with a back problem, you know, or a knee problem. I mean, and if surgery is indicated, forget it. They’re not going to be able to get this coverage, perhaps at all.

06:21 Cathy Curtis:

Let’s say someone has a knee injury from a ski accident. And it keeps bothering them, it and they they’ve gotten an X rayed and MRI. And it’s not something that can be operated on, but they need to do PT, so they get referred to the PT person, and they start going and with that kind of thing be considered non eligible. And you would say, go through the physical therapy, come back to me in six months when you finished it. And then we could talk.

06:54 Liz Eshleman:

Yeah, and in fact, not just when you finish, but wait three months, because the company won’t cover you until they’ve seen that you’ve been off of physical therapy for at least three months. Every company’s underwriting guideline is a little different. But pretty much across the board, this issue of mobility is a concern, because they see that turning into the need for long-term care down the road.

07:15 Cathy Curtis:

Got it. Okay, talk about what conditions are absolutely not, cannot be covered by long-term care if you’ve got a condition like diabetes or…

07:29 Liz Eshleman:

Right. Diabetes is possibly insurable, depending on the agency really. So, you know, I won’t go into too much detail about exactly, but let me give you an overview of some. Of course, this past year with COVID, we’ve seen that become an issue for people. Now, a diagnosis of being positive for the COVID-19 virus has created a waiting period, that companies are insisting that the client has to wait. And it’s different with every company again. But right now, that’s looking like it may actually turn into complete un-insurability if you had COVID.

Yeah, because they’re seeing cognitive problems with some folks. They’re seeing ongoing pulmonary issues to difficulty breathing. I mean, there’s so many unfortunate long-term implications from having had COVID that companies are very wary. So that’s the thing about underwriting and we’re seeing it this year, it can change when companies find out that things are more troubling than they thought, and in unexpected ways.

So yeah, for now, it’s discovered that the long-term effects of having COVID aren’t that great. It may be something that isn’t an issue anymore in eligibility. That’s not, it’s kind of fluid, right? It’s a very volatile situation right now with COVID. So I don’t mean to lead with that, except that it’s just, you know, what’s on our minds right now.

08:58 Cathy Curtis:

So topical, I’m glad you brought that up.

09:01 Liz Eshleman:

Some of the issues that create un-insurability will be, and these are ones that I, there’s many issues, but I chose these to speak to because I think they’re not always, we don’t always think that this could be a problem. Like unexpected weight loss. Maybe it’s not an issue, but maybe it is. Having more than four drinks a day is uninsurable. Back pain that requires narcotic medication, or it’s just a disabling back pain, uninsurable. Any chronic pain, as I was mentioning, is going to be an uninsurable condition, and that’s probably not going to change unless the person has some really unusual change, you know, change in their health, because usually, if something is disabling, it’s hard to get back up and running.

You know, if it’s a bad back pain, and folks are a little bit older, it’s not usually getting better. Frailty, a head injury. I had a client, unfortunately, recently, who had forgotten that she had. She had rented a car, and the guy was showing her how the trunk worked. And he slammed the trunk down on her head. Well, that’s a whole separate thing. But she’s now in trouble because the MRI showed something else, something else in her brain matter that indicates memory loss. So any MRI is really tricky territory.

10:28 Cathy Curtis

Let me interject sorry. So this is a good example. So when you have this initial phone call with a potential client, long-term care buyer, you will ask them all these things?

Liz Eshleman:

I do I tell people, per day, do you smoke? Do you have any chronic pain? Issues? Are you taking any…

Cathy Curtis:

And you ask about any medications? Depression, antidepressants, things like that?

10:57 Liz Eshleman:

Yeah.

10:58 Cathy Curtis:

Tell me about that. Because a lot of people take antidepressants for years to handle, you know, anxiety or whatever. How do the companies consider that?

11:08 Liz Eshleman:

That’s a great question. You know, it’s a little counterintuitive. They actually, the company underwriting departments, like what they call stability. So if a person has been on a medication for 10 or 15 years, the companies don’t view that as a negative. As long as there have been no hospitalizations for depression or no serious episodes. If it’s just the maintenance of well-being and the medication’s working, the companies actually like that, because they see that this potential issue for that person has been handled.

What they don’t like is a new diagnosis. So let’s say something happened, a person lost her spouse, and she fell into a depression. And she had to have medication that was increasing in dosage. They wouldn’t like that. Or she got on her feet, she was feeling better. Now she decreased her dosage. They also don’t like that. They don’t like volatility in a person’s health history. They want to see stability.

12:10 Cathy Curtis:

Okay. Okay, so you find these things out?

12:14 Liz Eshleman:

Yeah, I asked my clients, I tell them, you know, please bear with me, but I’m your advocate. And there, they tell you everything, open kimono, so to speak. And then you know, the insurance company. So you will say I think we can apply given what you’ve told me or you say, you know what, either you’re not going to be eligible at all, or this is a course of action I think you should take, wait six months. See if, you know, see if you’re off the medication, whatever. Or maybe in the case of a widow who just starts taking an antidepressant, if you’re on it for how many years before you come back.

And you know, it’s not that it’s not that difficult. For instance, usually a depression like that is situational, and does kind of abate over time. So as long as, even if they’re on the medication, that’s okay. But it has to be for a period of time, usually three to six months, at least, before the company will then take a look at whether or not they want to underwrite you.

13:17 Cathy Curtis:

Okay, got it. So this brings up a thought in my mind. I remember when I used to, when we first started to work together, I’d have a client and I’d say this person probably needs to buy some long-term care insurance. I don’t think their assets are going to last, or it could insure the assets they have, you know, there’s a couple of reasons to buy it. And I’ll call you and go, could you just give me an estimate of what you think it would cost for this person. You’d say, you know what, I really can’t give you an estimate. There are so many factors that come into play, I really need to talk with the person to find out about their health history. And now, I understand why. Because it’s like you’re the gatekeeper, to figure out whether someone will be eligible or not, and to help them.

14:01 Liz Eshleman:

Yes, and I never want to give a person a false indication of whether or not they can get coverage. If I don’t have the, if I don’t know about their health history, I really don’t know. Not only whether they could get it, but if they can get it, what would be the proper rate to quote, because there’s different rates for this type of insurance, just as there are, you know, rates for life insurance. So, you know, it makes it sound like this is difficult to get, you know, it kind of is. Yeah, it’s kind of hard to get long term care insurance.

14:31 Cathy Curtis:

Exactly. That’s that. Okay. So that’s a good summary of the eligibility issue is it’s hard to get. It’s worth talking to a long-term care consultant to find out, but don’t be too disappointed if they’re, you know, there’s some roadblocks there or you might not be eligible. Okay, so we’re gonna move into the types of products that are out there because this industry is ever evolving, as a lot of industries are, as they figure out what’s profitable and what’s not. Particularly in the last would you say, five years, there’s been a lot of change in the types of products out there.

15:14 Liz Eshleman:

Yes, I would say that traditional long-term care insurance began in the 1970s. And it’s just like every other insurance product we buy to protect, you know, a car, an automobile accident or a hospitalization. Or you know, a fire in a home, we buy this kind of insurance where, if something happens, the claim is covered. But we never get a return of that premium, we just had that risk covered, we had transferred that risk onto the shoulders of the insurance company.

That’s what we call pure insurance. And traditional. That’s the model. And I’ll go into more detail about that momentarily. The other model that has become very attractive, especially to my clients of high net worth, is the hybrid, where in fact, you’re not just really covering that long-term care risk. With that pure insurance, you actually are doing a couple of other things, you’re buying life insurance, whether or not you want life insurance isn’t really the point. By buying the life insurance with this product, that’s called a hybrid, then you’re locking in your rate. With additional insurance, your premium could change as it does with car insurance, with health insurance, it usually goes up. That could happen with the traditional insurance product. With the hybrid, the rates are guaranteed. That’s one major difference.

The other thing that’s very different with a hybrid is if you wanted to, you could pay it off, in a lump sum, or over 10 years or 20 years, there’s more flexibility with the payment options. With the traditional coverage you pay ongoing every year until you’re on claim, meaning you need the benefits, then you’re done paying. So that with the traditional leaves a question about how many years am I gonna pay. The other thing, of course, is that if you never need long-term care, the money you put into a hybrid would return to your estate to pay to a beneficiary as a death benefit. You can also get money back if you decide, you know what, I don’t want to play this long-term care insurance game anymore, you can get a return of premium with the hybrid.

18:00 Liz Eshleman:

Yeah. And one more very significant fact is that with the hybrid, there’s one company that offers what we call unlimited meaning, you know, heaven forbid, you have Alzheimer’s, and it lasts 10 or 15 years, this hybrid coverage would continue to pay benefits, as long as you needed to receive those benefits.

18:24 Cathy Curtis:

Okay, you’re bringing up a good point about the average amount of time most people will spend with a severe long-term care need, or let’s say, in a nursing home. And yeah, what I’m reading is for, oh, by the way, there’s a great study that Morningstar puts out every year or the last couple of years, about long-term care statistics. And I’ve pulled some stats from that. And for women, the average is 3.7 years in a nursing home. And for men, it’s 2.2.

So right, so I like to know about those numbers, because that tells me as a financial advisor, if a client doesn’t have the resources to buy more insurance, like these unlimited policies, which you want an unlimited policy, but they’re expensive. So if you could at least get the average amount of years, you’re getting help to cover the cost. You know, you don’t have to have it fully covered, you’re getting help for it.

19:25 Liz Eshleman:

Absolutely. And as I like to say to families or to my single clients, you don’t have to crisis manage on day one. If you have a long-term care event, and you have a two-year plan, there’s two years where your family, your friends, your loved ones are helping figure out if your need will be more ongoing, longer than two years. They’re helping figure out, how are we going to pay for that, you know, whatever it will be, and you weigh in on that if you’re available to do so. Right? But people sometimes think, well, if I can’t get unlimited, why would I buy this at all, which I think is missing the point of the stress of trying to navigate a long-term care event with no plan in place.

20:15 Cathy Curtis:

Yeah, I agree. Also, the mechanism of when you initiate a claim of using the money is something that a lot of people don’t understand. They think it’s a daily benefit, which it is, but then there’s actually a maximum in most cases. Could you explain that? And do it based on the traditional long-term care where you’re paying every month for so many years?

20:41 Liz Eshleman:

Okay, sure. So let’s say your daily is $150. So, I’m going to speak to it from two directions. And I hope this is helpful in answering the question. If you need to spend more than $150 a day, then you have to come up with that additional amount from assets. But if you need to spend less than that daily amount, because maybe you only need a little bit of home care, and it’s only $100 a day, then the amount that you purchased will roll over. And so your daily is, it’s a maximum. You can’t get more out of your policy than the daily that you structured when you bought the coverage. Is that helpful? Is that what you wanted to know?

21:32 Cathy Curtis:

Yeah, but then most people are also purchasing, let’s say they can afford three years of coverage. So it becomes $175,000. In total, once they’ve reached that $175,000, it’s the pot, you don’t have any more money. So it’s a daily maximum, but it’s also a bucket of money that is finite.

22:01 Liz Eshleman:

Yes, that’s right. And, you know, maybe it would be helpful to actually talk about a particular plan for a minute. To illustrate what you’re getting at. Okay, so I structured a plan with a company. It’s Mutual of Omaha, right now their pricing is terrific in California. They’ve upped their prices around the country, but California, they still have, I think a more affordable plan. And I structured it to be a $200 a day benefit. So that $6,000 a month, that will more than cover homecare, that will perhaps cover almost all of assisted living. And I structured it to last two years, to our point about something’s better than nothing.

So the bucket of money is $150,000. Now $6,000 monthly benefit, bucket of money, $150,000 is terrific today. In 20 or 30 years, it won’t buy as much. So we need to add an inflation factor, right. So this benefit will increase. I don’t want to get too much in the weeds. But just to know that if a 55-year-old woman buys this policy today, she can count on it for her money to have doubled. Her $6,000 monthly benefit will be $12,000 monthly benefit, her $150,000 pot of money will be $300,000. It may last longer than two years. The two years is not a factor we should focus on. It’s just a factor in an equation. We multiply the monthly by the two years and we get the bucket. As long as there’s money in the bucket, you’re good to go.

23:47 Cathy Curtis:

Yeah. Okay. And so going back to my earlier point, if so, you’re saying that would be $6,000 a month, right? You’re buying $6,000 a month? If the costs are higher than that you pay those out of pocket? Correct?

Liz Eshleman:

Yeah. Okay. But it’s likely, I don’t know, California can be expensive. And it also depends on the facility. You can pick a premium facility and you’re fine with that. You go, okay, my long-term care insurance is gonna cover this much of the cost. And then I’m gonna pay the rest out of pocket because I want a nicer facility. And that’s perfectly fine. At least you don’t have to raid your retirement income at the rate of in current dollars, $72,000 a year, that’s not hemorrhaging out of your retirement.

24:30 Cathy Curtis:

Right. Exactly.

24:32 Liz Eshleman:

This plan that we just discussed for a 55-year-old woman is $275 bucks a month. Yeah. Which really, if you think about you get $6,000 a month for $275 a month and the $6,000 is growing. I think it’s a pretty good deal right now.

24:48 Cathy Curtis:

Yeah, you just have to understand that that may not cover all your costs.

24:54 Liz Eshleman:

That’s right. And that’s something that we look at when I talk with my clients. We go into detail about, I pull up a cost of care survey that we look at together to look at the current costs of care if they’re in San Francisco, or if they’re up in Sacramento, or if they’re, and I work with folks all over the state. So sometimes, I just finished helping a client up in Clearlake, much less expensive up there to receive care. So we look at that and figure out where do you want to go? Where do you think you’ll be? And if it’s an area, of course, it’s going to be some of the most expensive care, but $6,000 a month will help greatly even if you have to supplement.

25:34 Cathy Curtis:

Okay, and so this example you’re giving, I take it that this 55-year-old woman is getting the best rates. And so that means that she has really good health.

25:44 Liz Eshleman:

Yes, if she didn’t have terrific health, if she was on a blood pressure medication, let’s say, instead of $275 a month, it would be $325 a month.

25:54 Cathy Curtis:

Okay, got it. So you’re quoting the best case scenario with that first quote. Okay. Now, that makes complete sense. Okay, I want to talk about some of the other benefits. And we should probably talk a little bit about why you might not want to buy a policy so you know, so that people can have both sides.

You’ve often spoken to me about the benefit of having a care manager, right? Can you describe how that works? And do all the insurance companies offer that?

26:29 Liz Eshleman:

That is such a good question. Depending on the company, it might be a consultation on an 800-phone number. But with Mutual of Omaha, it’s an actual licensed health care professional, who will meet with the client, his or her family, and figure out a plan of care based on their needs. They don’t work for the company, because there’d be a conflict of interest, right. The company would want to keep it low, or, you know, assess the person as not needing as much care. So it’s a third party.

But I do think it’s so important, because even people who have really a terrific retirement portfolio, very well to do, if they don’t have someone help them access their money and help them figure out how they’re going to spend without selling what stock or liquidating what asset. See the care coordinator functions almost at the person, you don’t have to do that asset depletion. And now she or he is going to help advise which agency is a terrific agency, or which facility has a bed. When my mom needed care, I was running around trying to figure out what facility would be able to accept my mom. Oh, and I had to do all that research.

27:44 Cathy Curtis:

Okay, so when you choose a company, you’re thinking about that for the client? Do they offer that?

27:52 Liz Eshleman:

Absolutely. And I talk about that at length, because it’s not just a bucket of money you’re buying. You’re buying an infrastructure, so that you actually have care that can be managed by this care coordinator. And let’s say you don’t like your caregiver. You went through a particular agency, the person there’s a personality problem, or you don’t like the way the companies run the agency. You call the care coordinator, you say, I need a different agency entirely. No problem. That becomes what that care coordinator puts in place for you. So I cannot stress enough Cathy, how stressful that can be when your parent is failing, or when you yourself are failing. You don’t want to have to wonder, how am I going to get care?

28:41 Cathy Curtis:

Let me just bring up something else. And because there’s a lot of good, there’s a lot of myths about, oh, I’m not gonna buy long-term care, because when I need it, they’re gonna say you don’t qualify. So did you know what that whole thing? Does that person help you navigate that?

29:02 Liz Eshleman:

Absolutely.

29:03 Cathy Curtis:

Let’s talk about, well, a lot of people know this. But when do you qualify? You buy your policy, you’re 80 years old. All of a sudden you’re not well, and you can’t take care of yourself. So when would you go, maybe I should initiate a claim. Go through that. And does that consultant help with that?

29:28 Liz Eshleman:

Yes. Okay. So I will give you a real case scenario from my last six months helping a client. And I think you’ll be surprised at the profile of that client. But let me speak more broadly first, that I believe a person who feels in any way frail, they’re just a little unsteady on their feet, or they have bad arthritis. It’s hard to button the buttons on a sweater. It’s worth calling the claims department. You call the company and they’ll put you in touch with this care coordinator, who will then talk with you. And more likely than not, people, especially if it’s a couple where the spouse that might be a little more robust is helping the frailer spouse, they don’t realize over time that that frail spouse could have been on claim.

So that’s why you want to call the claims department immediately and open a claim. There’s no harm, you don’t have to take the money, but at least you get the assessment. And the care coordinator is talking with the doctor, your doctor, accessing records so that they can see, has there been a deterioration in their memory? Or has there been, you know, a risk of falling in the tub because they’re just not steady on their feet? The care coordination is not so much to bar you from receiving benefits with the companies I represent. Really this care coordinator is to help you access the benefits, right.

And I would like to give you the case scenario, a 55-year-old woman this year, you know, trying to get out and get some exercise during our lockdown, took a bike ride up on Grizzly peak in Berkeley. She wasn’t even up there yet. She was just getting out of her driveway. And she fell. And you know, the way she fell and the way the bike and she interacted, she really badly mangled her knee. And she’s 55 so I think that is very young, that’s younger than I am. And she was on claim for six months, because she had to have surgery. And she could not bathe herself. She needed help getting dressed, pulling on pants, it’s you know, when you can’t stand up, you can’t do very much at all. Her husband was trying to help her. He called me kind of in a panic. And I said slow down, Jim, you need to call the company. Well, they did, and the care coordinator worked with them to assess she needed help. And she went on claim. And it saved, I wouldn’t go so far as to say it saved her marriage, but I’m sure it helped a lot with frayed nerves.

32:23 Cathy Curtis:

Okay, couple of industry speak things. On claim means that she bought the insurance probably a few years ago. This was an incident that was covered under long-term care, they made a claim and they’re getting the insurance to cover it.

32:41 Liz Eshleman:

Yes, on claim just means now you’re receiving the benefits that you purchased when you bought your insurance. Now you’re accessing those benefits.

32:49 Cathy Curtis:

Okay, so another point is, and there’s a lot of misunderstandings here, is that long-term care insurance is just for old age care. And this is a perfect example of where it’s not just old age care. It’s also the rules, or tell us the rules about the things that you have, you can’t do, you know, just give us the basics about long-term care. So this is important.

33:13 Liz Eshleman:

Yes, it really is important. So the need for care has to last for 90 days or more. And the need for care is defined by needing help with two out of six activities of daily living (ADLs). And those six ADLs, the first two that tend to trigger a claim, meaning that the money you want to come in from that big bucket that you purchased is available to you. If you need help with two out of six, those first two that tend to trigger that and allow you to get your money are need for help with bathing and need for help with dressing. Not because you can’t wash yourself. Because you’re at risk of falling from, for instance, this client who hurt her knee, she couldn’t even take a shower. She had to do sponge baths.

I mean, okay, so bathing, dressing. The next two of six are toileting and transferring, which are somewhat similar in that they require the core muscles if you can’t stand up on and off the toilet. Or if you can’t get in and out of a chair or a couch or a bed. Because there’s just something where you can’t get that energy to get yourself to rise up. Usually that’s a paralysis or a frailty. Or you can stand up but now you’re dizzy and you could fall, you need that arm to lean on. That’s the need for help with transferring.

Okay, okay, and then the others are incontinence, if you have to wear a diaper, or eating, which is usually end stage if you need help actually feeding yourself, right? That’s not usually a typical first activity of daily living that you need help with. Okay, now one more thing, you could be quite robust physically. But if you, and so maybe all of your ADLs are fine, you can bathe yourself, you can dress but you have a severe cognitive impairment. In that case, you’re also eligible for the benefits, right? As long as the need lasts 90 days or more.

35:18 Cathy Curtis:

Okay, and I’ll just throw in a real-life example. My mother qualified because of mental impairment. She was, she stayed pretty physically robust. Okay, well into her 80s. But she was starting to forget things and she wasn’t taking her meds because she would forget. She wasn’t turning on the heat. The house was freezing. So that’s why she qualified.

Okay, good. So yeah, those are some of the basics. I’m really glad you went over that so well, so people know what triggers a claim. Doesn’t have to be when you’re old and are about to go into assisted living or nursing home. It can also be when you’re younger, and you have an accident.

36:06 Liz Eshleman:

Yes, this client of mine who had the bike accident, you know, was always at home.

Plus, shouldn’t we talk about the real reluctance people have now to actually go into facilities to receive care?

Yes, that is a huge deal. I mean, a large, large percentage of COVID deaths are still in nursing homes, or assisted living facilities, both patients and caregivers. I do know somebody who was going to move into an assisted living facility and pretty independent this year. And the main reason she doesn’t want to do it is because she may not be able to see her friends and family, because of restrictions. Now, I know that’s starting to lighten up with the vaccine, but there’s no way she wants to move in somewhere and not be able to see people.

36:59 Liz Eshleman:

And another thing to know is that typically, people who have long-term care insurance policies are receiving their benefits at home. I believe that only 12% are in nursing facilities. It’s between 7 and 12%. It’s a low percentage of people who have long-term care insurance policies who are in nursing facilities.

And the reason for that is because the families are not burning out, providing care at home without having that respite care that’s provided with a caregiver coming in. So if you have a plan in place, rather than the family immediately thinking, they are the caregivers, you know, you have money to buy caregiving from an agency. And you know what, you should just do that. That’s why you buy. That’s why we purchase long-term care insurance, is so that we save our families from the burden of having to provide care 24/7, potentially. So they can stay at home, they can still be with their loved ones, they don’t have to go to a facility. With my mom, in my own instance, mom had to go to a nursing facility because I couldn’t manage the care anymore. Because caregivers were quitting. And my doctor was worried about my health. That’s what happens with families providing care.

That kind of care is so hard. It almost has to be 24/7, because accidents happen. Yes, other people fall they break bones. And that’s so typical, that it’s almost a responsibility to get that care for your family.

Cathy Curtis:

That’s a really good point. And I’m wondering, I’m just curious, how many people buy long-term care insurance for their parents? Do you ever see that?

38:51 Liz Eshleman:

Yes, I do. I’ve had adult children purchase for a 75-year-old mom that they’re just worried about, that maybe their father just passed, and the mom is vulnerable and she’s fine, she can get coverage. But you know, they’re doing it so that in a way they protect themselves in this way. They want to be able to visit their mom, they want to be able to be with her, but they just don’t want to have to give up their entire life. Right? They might have young children. And that’s what happens in families is now you have to choose between caring for mom or going to your son’s soccer game. And it’s just a non-issue if you have a plan. It’s horrible. And it doesn’t have to be part of the equation at all if you have a plan.

39:42 Cathy Curtis:

Do most companies offer all home care, assisted living care, or any other type of care?

39:56 Liz Eshleman:

For instance, adult daycare, which is a place sometimes that folks with dementia will go during the day when a family member is going to work, that’s covered. Hospice is covered if you need it. So all the companies I represent cover every conceivable living situation in the United States, except you can’t take your caregiver on a cruise. I did have that question once.

40:29 Cathy Curtis:

Oh, that’s too bad. That would work, wouldn’t it? Okay, so we’ve talked about a lot of the benefits of it. Do you see, what are the downsides? I mean, I’ll bring up one. Of course, it’s not cheap insurance. And so affordability is an issue. And then the chance that you’ll pay premiums for all those years and never need it. Or you buy one of the hybrids where you put a huge chunk of money in and don’t ever need it. In that case, there are some ways to get your money back through insurance, or you’ve mentioned refunds. And I don’t know how often that happens where you don’t use it. Do you know?

41:19 Liz Eshleman:

I don’t have stats on that. You know, this is what I think about your question, Cathy. It’s a really good one. This is not for everyone. Long-term care insurance is only for people who want the peace of mind of not wondering what if, because to your point, it’s possible that you could pay a premium for 20 years or 30 years and never need care and die in your sleep at age 92. If that bothers a client, that they might never see a return on that investment in that plan, I tell them don’t buy this. This is for people who are worried and starting to think, I don’t know if I want to handle that risk.

So I always tell people, I don’t think there is a downside for the client for whom this is keeping them up at night, that they’re just not wanting that portfolio they’ve worked so hard to create, and those retirement savings, they don’t want them subject to this devastating risk. But there are some people, for instance, the very wealthy, they don’t need to purchase long-term care insurance. They can self-insure.

I do tell them, make sure you have a care coordination plan involved in your own estate management, right? If you don’t want your children saddled with it, make sure you get a very astute and much younger financial advisor. So if it’s a 70 year old, I have a guy, actually, he’s quite wealthy, and he’s buying a policy because he doesn’t want his kids to fight. But you know. But to not buy it is a completely legitimate choice. I just think it’s important to weigh why you’re not buying. And I think for most people, it’s just they don’t see themselves needing care.

43:08 Cathy Curtis:

Okay. A couple thoughts about the financial aspect. I want to clarify one term because I get asked about this a lot. Self-insure. Self-insured just means that you don’t buy insurance to cover all the costs, and whatever comes up with your long-term care needs, you pay yourself with your portfolio, or nest egg.

Okay, this is right on the same topic about the financials of buying long-term care and the way a financial planner looks at it. So I’ll do a financial plan for a client and one of the modules I look at is the need for long-term care. And what that really means is, if I think if they have a long-term care need, and I work with mostly women, so a need for expensive long-term care, can they afford it? And I’ll build that as a “what if” into their financial plan using my software tools. And if I see that, yes, they will, it’ll really negatively impact their plan, I start thinking about whether they could afford long-term care or not.

So that’s one aspect, the person who has you know, saved a good amount of money, but not enough maybe to cover a catastrophic expense of long-term care. That’s one example. The other example is a high-net-worth person who has plenty of savings, and when I put those numbers in the plan, and there’s a catastrophic health care need, they can pay for it and not run out of money. Okay, there’s that person, but they do spend a lot of their estate on long-term care. Maybe they have other ideas that they want to use there as well. For other than paying for long-term care, and that insurance and long-term care insurance policy can be a way to ensure that they don’t spend their estate down.

So I think that would be a need for someone of high net worth, who could probably afford to self-insure. And I think that’s a legitimate use of long-term care. And sometimes the numbers work out surprisingly well, especially with the hybrid policy. So the real sticky issue is the person who really needs long-term care insurance, but really can’t afford it. That unfortunate. And, you know, things change over time, maybe there will be more products that come out or more services that come out to help those people. But for right now, that’s, that’s kind of where it is.

And so I help people work through that affordability issue. And then the next step I advise on is to talk to someone like Liz, to find out about eligibility, get the quotes on cost, find out what it all covers. Then they come back to me, we go over it together. So you’ve got an advocate, you’ve got a long-term care consultant, and you’ve got a financial advisor that’s going to honestly tell you is this in your best interest or not to buy this long-term care policy. And, that’s how it goes on the financial end.

46:29 Liz Eshleman:

And Cathy, I think that to really underscore what you’ve said, as a long-term care consultant, you can tell I’m passionate about it, I believe in it. But I’m never going to say to a client that they should buy it. I’m only going to try to help them uncover whether they really feel they want and need it. And then you and I talk together about is it affordable, and you ultimately can weigh in on that for them.

So I just want your clients to know that it’s almost a fact-finding mission, right, as to whether or not this is appropriate for them, suitable for their finances, that they can afford it. And if they like what they see, I’m happy to help. But I never want to feel that. Even though I’m passionate about it. And I think it’s a really important topic to look at. I never want to feel that I’m pushing it on anyone, that it’s simply getting the information in their hands so they can decide what they want to do.

47:33 Cathy Curtis:

Exactly. Okay, so this has been so great. I hope we didn’t leave out any key information. Is there anything else you want to add about long-term care insurance?

47:50 Liz Eshleman:

I think we covered so much today. And honestly, if there’s something we didn’t cover, let’s revisit it. If your clients can call you, and then give them my number if they want to call me.

48:03 Cathy Curtis:

Okay, well, for the viewers who aren’t my client and listeners, tell us how a person could get a hold of you if they wanted to.

48:12 Liz Eshleman:

Well, I have a website. And I’m happy to receive a text or phone call, and all that info is on the website. And my email is liz@eshlemaninsurance.com.

48:51 Cathy Curtis:

Okay, great. And I will include that and your website in the show notes, as well as that Morningstar study, which I think is fascinating on the statistics about long-term care. And then Liz, if there’s any other brochure or any articles that you think are pertinent, I’ll add those to the show notes as well.

Okay, everyone, thank you so much. I think this will give you a really great primer on what long-term care insurance is about. Feel free to contact me at cathy@curtisfinancialplanning.com if you have any additional questions.

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